Three Reasons Why You Should Never Mix Business With Pleasure When It Comes To Banking
Posted on: 27 December 2017
There are many different businesses and business execs that like to mix business with pleasure. While that works for them, it does not work on every level. Take banking, for example. You cannot, nor should you ever, mix your business money with your personal money. Business banking should always remain separate of personal banking, and here is why.
There Is This Little Thing Called "Embezzlement"
Embezzlement is where you steal company money and toss it into your own bank account or several other bank accounts to hide your thievery. That is a big white-collar crime no-no. While it is true that those just starting a business do not realize what a really bad mistake this is, you definitely do not want to get caught even making an honest mistake. Put all your business transactions in your business account, and your personal transactions in your personal account.
It Is a Horrible Nightmare Trying to Keep Account
You have to keep record of every purchase you make and every bill you pay, both personal and business. Some people think that lumping it all together would make it easier, but it does not, especially when it comes to tax time. Poorly kept books result when you throw all the money into one account and you do not separate business expenses from personal ones. If you hire an accountant to help you, that accountant would be horrified at the accounting mess you have, as well as trying to sort through it.
If You Have to File for Bankrutpcy, You Cannot Prove Debt From Assets
If your business or your personal life are not going so well, and you have to file for bankruptcy for one or the other, there is no possible way you are going to sort out this mess. Which of your assets were purchased with personal money? Which of your losses or debts belong to the business? You just cannot keep all your finances in one spot and then not have to deal with mass confusion when your business fails or your personal debts take over your life.
Talk to a Business Banker
Business accounts are also handled differently by banks. The biggest reason most first-time business owners make this big mistake is that they are trying to avoid some of the fees associated with establishing a business account. There are accounts with various banks that help businesses without charging monthly fees for being under the minimum dollar limit. Business bankers can help, but only if you talk to them.
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